Paul GrahamVerified account

It's been almost 10 years since one of my most embarrassing fundraising moments as a founder. A moment so embarrassing that I couldn’t talk about it for years. It taught me the difference between raising a Seed round and a Series A, as well as some well needed humility.

In 2010, our seed raise was a breeze. We were young, arrogant, and deeply technical — a recipe for an oversubscribed round in 2010. We confidently handwaved away questions like "how will you get customers?" and spent most of our time building product.

In 2011 we started getting approached by Sand Hill funds to talk about a potential Series A, in the way that Sand Hill funds approach startups: They're excited, they're ready to fund, but actually they just want to learn more. Suddenly, we found ourselves fundraising again.

We were building an enterprise product but still didn't really have any paying customers (we had some free users). This time around my handwaving didn't work as well. Some investors politely nodded and then passed, but one AAA Sand Hill partner meeting went particularly poorly.

My first two meetings with this fund went well, and so I found myself in a full partner Monday meeting. It was a complete disaster. Once again, I was unprepared for the "how will you get customers?" questions, except this time the partner wouldn't let me off the hook.